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Kalanick got the boot after presiding over chaos and a company culture gone wild. Holmes awaits trial amid allegations of massive fraud.

Who Even Is An Entrepreneur?: Crash Course Business - Entrepreneurship #1

Her company, Theranos, shut down. Entrepreneurs present great promise but often suffer like tragic Greek figures. What makes them special can prove fateful for their startups. Despite all their strengths, they stumble into classic crises: entrepreneur sickness.

Otherwise, the siren call of success will crash you onto the rocks with the other failed startups. They start a business without enough cash, making compromises that can kill their company. They do handshake deals. Then, they get stiffed or sued. Bitcoin companies are getting slammed for unregistered bitcoin offerings.

This next one is a rampant screwup. These fundraisers are smooth talkers with plenty of connections to investors. But securities law generally requires all fundraisers must be registered broker-dealers. If a startup violates this rule, investors can insist on a refund of their investments even long after their investments have been spent , the startup and its executives can be found liable for civil and criminal penalties, and the startup can be barred from later selling stock. The entrepreneurial gold rush encourages speed.

Sometimes caution is just as valuable.


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Entrepreneurial Wizards are constantly discarding businesses. Under the law, once you sign a contract, you are usually on the hook forever — unless the other parties release you. So, just selling a company is not enough to get rid of the problems. Even if you find a purchaser who agrees to perform all of your obligations, it is not enough.

The purchaser could go belly-up and then you are back in the hot seat.

Home Services

Then, your old contracts can come back to haunt you — from the Keurig coffee machine contract to the ping pong table rental agreement to the vastly more onerous obligations of real estate leases and business loans. The solution is to get all of the parties to agree you are released — regardless of what happens next.

Allied Forces?

I knew one software consultant who was so proud of his service agreement. He found it on the internet and used it with all of his clients. I took a glance and then delicately pointed out that his contract was terribly one-sided — in favor of his customers. There were provisions, like warranty and indemnification provisions, that could put Sir-Save-A-Buck out of business.

Many entrepreneurs hit the gas and race past the details — like contracts.

Entrepreneur Sickness: The Five Screwups Of Startups

Or stitch together bits and pieces of other agreements to create their own Franken-Mess. Mind you, these startups will go on spending sprees for trucks, software, the latest cube furniture, and even a vintage Asteroids video game machine for the breakroom. Do you get a change order for the extra cost? Can the university license the improved version to a competitor? Do they have enough insurance if there is an accident?

You should have a contract that covers the most important risks. You can pay now — and get a good one. Or, you can do without and pay later. Startups are in such an enormous rush to conquer the world that they often overlook basic precautions and fail to protect their companies. These rabbits jump into business without giving much thought to the risks.

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